Condo sales lead real estate uptick

CEBU, Philippines — Demand for condominiums in Cebu is seeing an uptick given their proximity to the business center and increased affordability.

Dinbo Macaranas, senior research manager at Colliers Philippines, said take-up of horizontal and vertical developments is expected to remain at a healthy level looking ahead, with a slight bias on condominiums considering the business activity in Metro Cebu.

"Take-up of condominiums has totaled twice as much as house and lots," he noted in a report on Cebu's residential market as of second quarter 2017.

About 75 percent of condos is in Cebu City. The balance is split between Lapu-Lapu at 15 percent and Mandaue at 10 percent.

The concentration of condominium developments in Cebu City is not surprising given that much of the economic activity is found in the provincial capital, thus, most investors and provincial migrants prefer to locate in the city. 

About 63 percent of the 2,600 units of condominium take-up in the first half of 2017 come from affordable and mid-income segments.

"Prices of condominium units have become comparable with house and lots," he said.

Take-up of condos however reflected an 18% decline compared to the first half last year, due largely to the slowdown in the number of launches.

Meanwhile, in the case of horizontal developments, while launches increased, take-up has slowed down as well.

"The wider options provided by condominiums have had an impact on demand for house and lots," Macaranas noted.

Take-up of house and lots in the first six months of the year was at 1,300 units, 16 percent lower than the same period last year.

Given relatively reasonable land prices outside the capital, developers are more willing to build house and lots in locations outside Cebu City.

Lapu-Lapu has the majority of the share with 14,300 units or 55% of Cebu’s horizontal stock. Cebu City has only 36 percent while Mandaue has 9 percent.

The noted decline in take-up has been minimal and Colliers expects demand to rise with new launches given that Cebu remains as a major business hub outside of Metro Manila.

The activity in the Cebu residential market has also seen a shift from a largely leisure play, to one that also offers opportunity for end-users, according to Colliers.

Today, new projects are available alongside the leisure options which cater primarily to investors.

Despite the slowdown in the number of condo launches, Colliers still expects over 17,000 units to be completed between now and 2020.

"These will further expand the options for buyers in the major Visayan province that has seen more demand from end-users," he said.

Moreover, continuous development of Cebu Business Park and Cebu IT Park has also been noticeable.

Consequently, end-user demand will continue to come from employees of multinational companies, manufacturing firms and business process outsourcing entities.

"We recommend that developers cater to the affordable and mid-income segments by developing projects with price points between P1.7 million (USD34,000) and below P6 million (USD120,000) TCP threshold where demand is strongest," he said.

Furthermore, location will be key given the worsening traffic situation in Cebu.

Supported by a steadily growing business center in Cebu City, Colliers expects property demand to continue, particularly for affordable and mid-income segments. (FREEMAN)